At present, there are three types of bond and credit card systems in use. A first of these systems is a debit-point of sale system in which all transactions are processed electronically and the card holder's bank account is debited immediately. This system is not a true credit system and the card holder's card serves only for identification and as a means for transferring data from the magnetic stripe on the credit card to the bank's data bank.
A second system is a paperless system in which a sales transaction is recorded and processed electronically. This system also uses credit cards each of which beam a magnetic stripe encoded with the customer's name, account number, and other discretionary data such as the card expiration date and security data. The card also identifies the card issuing association (i.e., Visa, Master Card etc.) and its member bank if applicable.
The point of sale terminal in such a second system contains a magnetic stripe reader, a display, a keyboard and a modem often with automatic dialing capability. The terminal also frequently includes a printer or an imprinter for recording the transaction on a multi-form sales slip.
In the context of one of these second systems, a sales clerk swipes a credit card through a magnetic stripe reader and keys in the dollar amount of the sale along with other discretionary data. The clerk then presses a key to transmit the data. The terminal responds by dialing the number of the local concentrator for the card-issuing association. When the concentrator responds, the terminal transmits the transaction data and awaits a credit authorization response.
The National Data Corporation (NDC) network transmits the transaction data to the data bank of the credit card issuer. The issuer's data bank is searched and a credit authorization number is transmitted back to the point of sale (POS) terminal where the transaction originated. If credit is authorized, the sales clerk writes the sales authorization number on the sales slip.
A sales slip is now generated in one of two ways. In the first, the credit card embossing is transferred to the sales form and the clerk writes in the dollar value of the sale.
The second way uses a printer. In this instance, the magnetic stripe information on the credit card and the dollar value of the sale are printed on the sales form, one copy of which is returned by the merchant and another of which is given to the customer.
The third system is a paper system which is used for 90-95 percent of all bank and credit card transactions. Merchant payments and account settlements all depend on the information contained on the sales form copy that is mailed to credit card companies such as Diners or American Express, by the merchant.
In the paper system, credit authorization is handled by the NDC network described above. The sales transaction data, though, is entered into the computer by a central bank clearing house operator who reads the bank copy of the standard sales slip form pack and enters the pertinent information into the computer by means of a keyboard.
Operation in the paper system requires a credit authorization request. If authorization is granted, the sales clerk enters the authorization number on the multislip sales form. Thereafter, the customer card is placed in an imprinter and the multislip sales form is positioned over the card in a familiar fashion. The sales clerk activates the imprinter to transfer embossed characters on the card to the sales form along with other information such as the name and account number of the merchant and the data of the transaction. The embossed information on the card includes the customer's name, account number and the expiration date, only the account number being presented in machine readable form. The clerk completes the transaction by entering the dollar values of the transaction plus other data such as the tax, the tip and the total. One copy is given to the customer, one is sent to the card issuer, and the merchant retains the remaining copies.
The merchant tabulates the issuers copies and delivers a collated package to the designated agent of the issuer for ultimate delivery to a central bank. The central bank microfilms each sales slip, assigning a tracer number to each slip. Next a stack of slips is fed into an optical character recognizer (OCR) which reads the account number. The operator keys in the dollar amount and enters carriage return at which time the data goes to the computer. If the OCR device fails to read a slip, the operator has to key in the account number as well as the dollar value.
The data thus obtained are processed, stored, and transmitted electronically to member and associated banks. Bills are generated and mailed to card holders by the member banks.
Major oil companies imprint customer's account number, the dollar value, the merchant's account number, the date of the transaction, and the invoice number all in machine readable form on the sales slip so that the required transaction data can be read and entered into a computer without the need of an operator.